Economic Development & Growth

In electricity markets, market power is typically measured by the difference between observed offers and underlying marginal (variable) cost of power production. Therefore, marginal cost estimates should be as accurate as possible to ensure unbiased measurement of market power and welfare-improving mitigation thereof. However, cost components and power plant characteristics are private information and firms have an incentive to overstate costs. Instead, system operators thus proxy marginal cost of power plants from past offers of the respective plant, which leaves room for strategic manipulation by firms. This article tests the accuracy of this best-practice benchmark approach against multiple suggested alternative methods. The results of our empirical analysis reveal a low estimation accuracy of the currently applied benchmark approach. All suggested alternative approaches deliver more precise estimates.

Sub-Saharan Africa ranks as one of the world’s poorest regions. The causes of this are exceptionally complex, with political instability, lack of security, low levels of education, poor access to infrastructure and lack of integration into global trade networks as the leading explanations, among others. In recent decades, economists and agricultural development experts have been looking for ways to increase agricultural productivity in Sub-Saharan Africa through improved seeds, fertilisers and more modern farming technologies. This article looks at the measures in question, what has been done so far, and how scientists assess the effectiveness of these measures on agricultural productivity and poverty reduction. Finally, we present concrete recommendations.

Innovations form the backbone of sustained economic growth and, as such, they play a key role in safeguarding prosperity. Governments, aware of this, invest heavily in public research at universities and research institutes, and strive to create ideal conditions for private sector research and development (R&D), usually through specific R&D tax credit schemes or direct funding.

A strong middle class is important for political stability in democracies and can be an anchor against political extremism. With their consumption and labor input, middle class households make a significant contribution to economic growth and a prosperous society. With their taxes and other levies, the middle-income groups also contribute significantly to revenues and thus to the government budgets and the financing of EU welfare states. At the same time, the middle class has come under pressure in many countries in recent years. In many European countries, it is therefore questionable whether and to what extent the middle class will be able to bear further fiscal and financial burdens during the current crises and to meet the state’s additional financing needs to cope with major challenges such as climate change, the energy transition, the security policy shift, or demographic change.